In the Zone
In the capital of Western Australia for my second stint at the local university’s In the Zone conference, I’m reminded again how much the country’s only Indian Ocean facing state is determined to seek a worldview distinct from that of the more populous bits of Australia that face the Pacific.
When an American speaker exclaims, “This is like a separate country!”, the locals are all smiles. But one Perthian admits that Western Australians isolationism from Canberra has fed into a tradition of indifference to the rest of the world.
If Perth can now seek a different outlook, it’s because Western Australia is riding high on the global commodity boom. Iron ore, diamonds, gold, coal — the stuff is being dug out by the million tonne or the million carat to feed the economies of India, China and the like. The state earns about 40% of Australia’s exports once you toss in its agricultural exports. “Rocks and crops,” says one former Oz trade official.
“That’s what this state’s about.” Back in Melbourne and Sydney the state’s wealth is the stuff of legend. Tales are told, mostly true, of mining towns air freighting their laundry to Perth and having sandwiches brought on the return flight. And all Perthites shake their head about local real estate prices.
Robert Kaplan’s book Monsoon, which claims the Indian Ocean is about to become a giant geopolitical chessboard between India, China and the United States, is lietmotif during the conference. But the foreign policy panelists, myself included, were more sceptical. Some argued the Indian Ocean wasn’t really a single strategic space at all. Others joined me in saying that the China gambit is exaggerated and even India believes a multilateral security arrangement is the best forward. As New Delhi has publicly said, the major powers are largely in agreement about what they want in the ocean — so there’s grounds for cooperation not competition.
Fear of Inflation
The economics-minded speakers said the region, and the world, has more to fear from the spreading wave of inflation that is roiling the emerging economies. The Arab world is already feeling the storm. And China is in cold sweat about it. But everyone should fret. Australia’s concerns should be the possible fallout: bubbles popping, commodity price crashes, and worse.
“You are seen as an extension of the China story,” warned a fund manager. “When they suffer, everyone sells Australian stock.” They need to diversify, admit Perthians, which is one reason they’re looking intently at India for something more than just cricket.